Angela Ahrendts had success at Burberry but it is a minnow compared to Apple
Stores and she faces challenges

Although she will no longer be at the top of a public company, when Angela Ahrendts leaves Burberry to lead Apple’s retail operation she will take charge of a much larger business.

The Apple Stores, which first appeared in American shopping malls in 2001, last year accounted for $18.8bn (£11.8bn) of the company’s $156.5bn total revenues. The operation, comprising 408 stores worldwide, covering 4.1 million sq ft, made a profit of $4.9bn.

Burberry, for all its success over the last decade as a global fashion brand, is a comparative minnow. Its revenues last year were only £2bn and profits just £351m. Ms Ahrendts took home £16.9m and was the best-paid FTSE chief executive last year, but her predecessor in her new job got £36m just to welcome him to Apple.

Apple's expansion as a retail giant is attributed to its late co-founder Steve Jobs’ desire for control over every aspect of how customers experienced the company’s products.

According to his official biographer Walter Isaacson, Mr Jobs began developing the Apple Store concept in 1999, three years after his prodigal return to the company. At the time, home computers were increasingly commoditised. Pile-‘em-high retailers and Dell’s direct sales model were dominant.

Mr Isaacson wrote: “Other computers were pretty generic, but Apple’s had innovative features and a higher price tag. He [Jobs] didn’t want an iMac to sit on a shelf between a Dell and a Compaq while an uniformed clerk recited the specs of each.”

Mr Jobs explained: “Unless we could find ways to get our message to customers at the store, we were screwed.”

Apple turned to an experienced retailer to address the problem. Mr Jobs brought in Ron Johnson, a senior executive at target, an American supermarket chain.

Together they designed and built a prototype Apple Store in secret near the company’s Silicon Valley headquarters. Rather than an electronics retailer, the Apple Store would be modelled on the Gap’s spacious, wooden-floored fashion stores. It would display computers and gadgets according to what people can do with them.

Despite scepticism from the Apple board, Mr Jobs went ahead to open the first Apple Store in Virginia in May 2001, complete with the “Genius Bar” technical support area that quickly became the chain's most famous and most lampooned feature.

Announcing the first 25 stores, Mr Jobs said: “The Apple stores offer an amazing new way to buy a computer.

“Rather than just hear about megahertz and megabytes, customers can now learn and experience the things they can actually do with a computer, like make movies, burn custom music CDs, and publish their digital photos on a personal website.”

Along with the iPod, the iPhone and the iPad, Apple Stores turned out to be among his most valuable inventions. They are a highly lucrative business in their own right, with revenues per square foot in the United States last year that were twice as high as the second-placed retailer, the jeweller Tiffany & Co,

Crucially, they also serve as a bricks and mortar foundation for Apple’s unmatched brand, providing a focus of excitement on product launch days, free WiFi to visitors and an expression of the company’s minimalist design philosophy on a grand scale.

As the operation has grown, by as many as 54 stores a year, so has Apple’s ambition. It has opened a giant Apple Store at the heart of the iconic Grand Central Terminal building in New York and behind a neoclassical facade on the Kurfurstendamm in Berlin. A video tour of developments in the retail operation has become the traditional opener to Apple’s product announcements, with soaring narration dedicated to the effort it puts into choosing sandstone and designing staircases, a personal obsession of Mr Jobs.

But Ms Ahrendts will not inherit a business without challenges. Rivals such as Samsung and Microsoft have copied the Apple Store template and are expanding their own retail footprints around the world. Apple retail has been without permanent leader for over a year following the brief tenure of former Dixons chief John Browett, who took over after Ron Johnson left in 2011 for the top job at JC Penney.

Furthermore, Apple Store revenues slipped slightly in the most recently reported quarter as part of a wider slowdown across the company. The recent introduction of new iPhones is expected to bring new growth, however.

The appointment of a fashion executive has inevitably stirred up rumours of a move Apple into wearable technology with an “iWatch”. It also recently poached Paul Deneve, the chief executive of Yves Saint Laurent top work on “special products”.

Rumours aside, Ms Ahrendts’ qualifications to run Apple Stores, as well as its online sales, are solid.

The label has for years won plaudits for its digital strategy, having pioneered the use of Facebook and Twitter to expand its brand online without damaging its luxury image. In spite of its traditional positioning, it is no technological slouch in the real world either. Burberry’s flagship on Regent Street, billed as “part event space, part innovation hub, and part store”, features interactive mirrors as part of an effort to meld online and offline marketing.

The British label has also enjoyed major success in China, which remains a massive and largely untapped market for Apple. Demand for Apple Stores there is so great that dozens of counterfeit stores have been opened, complete with fake “Geniuses”.

Her first priority appears to be restoring Apple’s focus on customer service, which was a lower priority under John Browett.

Tim Cook said: “She places the same strong emphasis as we do on the customer experience.”